Long Hot Summer For Gm And Uaw

July 02, 1998

What began June 5 as a narrow--though bitter--labor dispute between General Motors Corp. and the United Auto Workers in Flint, Mich., has since escalated into a titanic showdown. Both GM and the UAW rightly consider this strike a watershed that will determine their fortunes as the 21st century dawns.

That this confrontation should have begun in Flint is no surprise. It is both the birthplace of General Motors and the site of the famous 1937 Sitdown strike that forced GM to recognize the UAW.

This one started over the absurd and anachronistic practice of allowing a small number of GM workers in Flint to be paid a full day's wages for less than a full day's work. But if the spark hadn't been the "pegged rate," it would have been something else.

GM insists it must increase worker productivity to survive in an increasingly competitive world. The 9,200 Flint UAW workers who precipitated this strike are seeking to defend a world that is slipping inexorably away from them. If GM is to thrive in the global auto wars, it must prevail in this dispute. But the cost to the company and its workers is already mammoth and growing by the day.

There is no love lost between GM--the world's largest industrial company--and the UAW. Ford Motor Co. and Chrysler Corp. endured painful downsizing for productivity gains long ago. Today, for example, Ford earns on average twice what GM does on each car made. Over the years, those competitors have made their peace with the UAW.

But GM's relations with the union have been marked by confrontation and mistrust. The UAW has struck GM a dozen times in the last two years alone. This is a bad marriage that just got a whole lot worse--and divorce is not an option.

Since the current strikes began, GM's North American operations have been crippled. The company has laid off 162,700 hourly workers at 26 of 29 manufacturing plants and more than 100 parts plants in the U.S., Canada and Mexico. The strikes so far have cost GM $1.18 billion and are the longest since a 67-day walkout nearly 30 years ago.

To conserve cash, GM--currently in the middle of what would have been a normal two-week summer shutdown--has now ordered a "cold shutdown" of non-essential operations. In an SEC filing, the company said it expects the strikes to have a continuing impact on operations, an indication GM and its idled workers are facing a long, hot summer.